Pessimistic report from China

There’s been a lot of FUD lately about the latest, as-yet-unconfirmed news that China’s central banking authorities were clamping down even harder on Bitcoin than before. While we still lack official announcements, the view from the ground is not promising.

On March 27, the well-respected Chinese news site, Caixin, reported that the People’s Bank of China (PBOC) had instructed all banks and third-party payment processors in China to cease doing any Bitcoin-related transactions and to close the accounts of any businesses dealing with Bitcoin by April 15.

Though the story was picked up by other major news outlets at home and abroad, there has been no independent confirmation of the news. Immediately after the Caixin report, all of China’s major Bitcoin exchanges said they had received no notifications from their banks about imminent account closures. When I directly asked for clarification from BTC-China on their WeChat account, I was basically told, “Nothing has changed. We haven’t heard anything. Don’t worry.”

But that was last week.

While the PBOC is not sharing anything with the public at large (typical of Chinese government agencies), it seems some aspects of the Caixin report may in fact be true.

Several of the Bitcoin exchanges have shut off fiat-to-bitcoin conversions, while still allowing coin to-coin transactions and withdrawal to CNY.

BTC-China, where I have an account, has shut off its convenient YiJingDong voucher payment method, and a spot check of the other vouchers revealed that some of these options have disappeared from the TaoBao online shopping site. Direct transfer from a domestic bank account to one of four BTC-China accounts remains, but there is no indication for how long. That may disappear altogether after April 15.

ANXBTC, a new exchange in Hong Kong, sent out emails announcing a new branch, MengMengBi.com, which would deal exclusively with mainland customers. (HK is a Special Administrative Region with different laws and regulations.) I signed up with MengMengBi, but have been unable to access the site for the past week. ANX may have abandoned the project, at least for now.

One bright light in this darkness is Ripple, which seems to be flying under the radar of China’s Bitcoin haters. Vouchers for XRP are still being sold on TaoBao, so in a pinch I can still buy XRP with fiat, and convert it to BTC elsewhere. So, I still would have a low-cost way to transfer money from my Chinese bank to my American one. As I explained earlier, the process is not especially convenient or quick, but it’s cheaper than PayPal or wire transfers.

I wish I could report that all the FUD is unfounded rumors, and that the Caixin report was fake, but indications so far suggest that the Chinese government wants to limit access to Bitcoin. The exchanges may be able to find ways to work around the blockade, or may wait until officials lose interest and pursue other projects (as often happens here), and resume normal operations again. We’ll know more after the 15th.

The exchanges seem to be saying everything is OK, while some of their payment methods are drying up. To play it safe, I’ve withdrawn all my holdings at BTC-China till after the 15th. If the vouchers and direct bank transfers hold firm, I plan to buy more ‘coins while the prices are still depressed.